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Business co-founders in tech startups are less valuable than they think

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Re: Business co-founders in tech startups are less valuable than they think

#141

Post by notfromhere »

osrec wrote: post #126
dgs_sgd wrote: post #8

I recently walked away from a potential startup because my non-technical partner (MBA ideas guy) wanted an 80/20 equity split in his favor. I was the first to broach the discussion and proposed 50/50. It was a severe misalignment in expectations, and this was after 3 months of meeting regularly to refine the idea and build out prototypes (read: I was building the prototypes). My advice is to have this conversation wi…

Good you walked away. In my experience, the heavy lifting in a tech start up is, by definition, the tech. The "idea guys" rarely understand that it's the execution that makes an idea valuable. Sales are important, but are a bit of a crapshoot. You can't consistently sell trash, no matter how good a salesperson you are. The guy was happy to roll the dice, while using your mental energy. Great deal for him, but not so…

The business side needs to have subject matter expertise in the market, running an org, fundraising, marketing, etc. 'ideas guys' are pretty worthless without that.

80/20 is an insane proposal; 50/50 feels reasonable, but I 100% agree with you that the technical side is way more crucial than the business side, since under $10m in ARR your biggest issue will be making the tech work well enough to attract customers.

Re: Business co-founders in tech startups are less valuable than they think

#142

Post by notfromhere »

Ancalagon wrote: post #99
dgs_sgd wrote: post #8

I recently walked away from a potential startup because my non-technical partner (MBA ideas guy) wanted an 80/20 equity split in his favor. I was the first to broach the discussion and proposed 50/50. It was a severe misalignment in expectations, and this was after 3 months of meeting regularly to refine the idea and build out prototypes (read: I was building the prototypes). My advice is to have this conversation wi…

I had this exact scenario happen on the ycombinator cofounder matching of all places. Except the other cofounder (non-technical) wanted it 95/5. Yeah, I stopped all contact that same day. That project never got launched.

You should have countered with 95/5 in reverse, because if you can't code, nothing is getting done anyways.

Re: Business co-founders in tech startups are less valuable than they think

#143

Post by saucymew »

n_ary wrote: post #124

The article reads… interesting. A business depends on its demand, competition, scale, operation costs and numerous other factors. If the product is a tech, a technical founder can have immense impact on future success but marketing, customer acquisition, sales, networking, fund raising and other huge headaches are often burdens carried by non-technical counter part. Of course, the person building something from a vag…

Great points. Good founders are on both sides of selling and building. If you don't believe in sellers, you've never worked with good ones.

Re: Business co-founders in tech startups are less valuable than they think

#144

Post by wolpoli »

turbotim wrote: post #116
wolpoli wrote: post #19

Earlier quoted context omitted.

The technical cofounder becomes less important as the company grows through.

Can you say a bit more here, genuinely curious as to why.

I made an observation that, as a company grows, there are more opportunities for increasing revenue from the business side than from the technical side.

Technical is important, but just saying that it is easier for the business side to toot their horn.

Re: Business co-founders in tech startups are less valuable than they think

#145

Post by ianbutler »

JumpCrisscross wrote: post #100
_bin_ wrote: post #68

Earlier quoted context omitted.

It can, to be sure, and it's not ideal. But the perception that technical co-founders typically get gypped hard is very warranted. This is a thing where you can often still get a reasonably good result with a technical co-founder, not as good as were he solely focused on product/tech stuff, but enough that his individual outcome may be higher than letting the biz guys run it. Obviously good biz guys somewhat mitigate…

> the perception that technical co-founders typically get gypped hard is very warranted I’d love to see the data. Most start-ups fail. For any given category of founder, there are therefore more stories of disasters than successes.

I mean YC literally has a video on how not to get screwed as a technical founder

https://www.youtube.com/watch?v=fcfVjd_oV1I

Re: Business co-founders in tech startups are less valuable than they think

#146

Post by vjvjvjvjghv »

A business cofounder who actually goes out selling and puts in the same effort and time the tech people do is worth a lot. Unfortunately not many business guys are like that. It seems that they get taught in business school that they are the leaders and the tech stuff is just secondary.

Re: Business co-founders in tech startups are less valuable than they think

#149

Post by jollofricepeas »

dgs_sgd wrote: post #8

I recently walked away from a potential startup because my non-technical partner (MBA ideas guy) wanted an 80/20 equity split in his favor. I was the first to broach the discussion and proposed 50/50. It was a severe misalignment in expectations, and this was after 3 months of meeting regularly to refine the idea and build out prototypes (read: I was building the prototypes). My advice is to have this conversation wi…

Yeah.

The ignorance comes from lack of experience and it happens often on both sides.

Engineers think they deserve a big equity package for writing CRUD apps.

“Businesspeople” with no startup experience, never raised money and never worked in sales think they have value.

If both co-founders have no prior startup experience then they both need to put in the same amount of money and split equity 51/49 or 60/40 (while considering dilution).

No once can build a meaningful company alone so you need to have a team and that team must have a servant leader willing to break ties.

It’s only inexperienced people that don’t know / understand this.

Re: Business co-founders in tech startups are less valuable than they think

#150

Post by epicureanideal »

cruffle_duffle wrote: post #105
parpfish wrote: post #86

Earlier quoted context omitted.

> Which is dumb, because sometimes I'm legitimately better at the strategy half too A semi-related thought I've had recently: I've run into a number of non-technical product people that say that they're primary skill is that they have a great "product sensibility" that engineers lack so they need to step in and provide guidance. It's true that many engineer-designed products are terrible, but I'd argue that most engi…

Conflict of interest is exactly how I term it as well. Tech people with good product sense have to work very hard to override their engineering instincts or they’ll handicap the product. I’m guilty of it all the time. What helps is remembering that absolutely nobody gives a shit about the code or the architecture. Nobody. It really doesn’t matter. They just want an awesome product. (Which isn’t to say none of that ma…

> What helps is remembering that absolutely nobody gives a shit about the code or the architecture. Nobody.

If there is no competition, money is nearly free, and you have all the time in the world, sure. If any of those isn't true, you probably want a reasonably well architected codebase so you're not spending 3X the salaries and 3X the time to build things as you would've with a well designed codebase.

> What helps is remembering that absolutely nobody gives a shit about the code or the architecture. Nobody.

We could easily say the same about anything. Nobody cares about the engine in their car either. Except they do, because it affects things like whether they can get from point A to B, which is what they really care about.

Same with code and architecture. It "doesn't matter" but it does, because it takes you from A to B at a particular speed and cost.

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